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This paper introduces new polarimetric algorithms for generating 3-D images and estimating scattering mechanisms from polarimetric multibaseline (MB) interferometric synthetic aperture radar (SAR) measurements. First, an MB interferometric SAR signal model is generalized to the fully polarimetric configuration, establishing the notion of polarimetric reflectivity. Subsequently, polarimetric beamforming, Capon, and MUSIC methods that determine optimal polarization combinations for height estimation are developed. These new techniques allow for extracting the height of reflectors, the associated scattering mechanisms, and the polarimetric (pseudo)reflectivities. By means of polarimetric dual-baseline interferometric SAR observations of an urban environment, the performance of the conceived algorithms is examined in detail. Producing 3-D images of a building layover, the quality of the approaches is compared in terms of refined resolution and lowered side lobes. Furthermore, the scattering processes occurring in urban scenes are investigated thoroughly by analyzing the optimal reflection types. The algorithms are validated using dual-baseline polarimetric SAR interferometric data at L-band acquired by German Aerospace Center's experimental SAR system over Dresden city.